The Securities and Exchange Commission today charged a Bellevue, Washington company and its principal with defrauding investors by making false and misleading statements about a failing real estate investment project.

The SEC's complaint alleges that, between September and December 2015, Kirk Sperry, by and through his family business, Sperry and Sons Capital Investments, LLC, fraudulently raised $125,000 from two investors in connection with a multi-million dollar residential project in Williston, North Dakota. According to the complaint, Kirk Sperry solicited the investments using a number of false and misleading statements. These included allegedly stating that the investment would be secured by a first position mortgage on the property when in fact a different investor and business partner held first position, and claiming that there were purchase agreements in place for certain lots, when those purchase agreements had been cancelled already. Further, the complaint alleges that Sperry and Sons, with Kirk Sperry's knowledge and consent, used part of the funds received from the investors to make payments to other investors in unrelated Sperry and Sons projects.

The SEC's complaint, filed in the U.S. District Court for the Western District of Washington, charges Sperry and Sons with violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Kirk Sperry with violations of Sections 17(a)(1) and 17(a)(3) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and liability for aiding and abetting Sperry and Sons' violations of Section 17(a)(2) of the Securities Act. The SEC seeks permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties.

The SEC's investigation was conducted by Silvana Quintanilla and Ellen Chen, and supervised by Jason H. Lee and Monique C. Winkler of the SEC's San Francisco Regional Office. The SEC's litigation will be led by Sheila O'Callaghan and Ms. Quintanilla.